How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
there's a typographical error in the problem. it should be December 31, 2021, not 2013.
This topic is about borrowing costs. based on the problem in the picture, Please choose the letter of the correct answer below;
How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
a. 360,000
b. 310,000
c. 328,750
d. 327,500
How much is the cost of the qualifying asset on initial recognition?
a. 4,360,000
b. 4,310,000
c. 4,328,750
d. 4,327,500
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